Mock Exam 6 — Question 1
Harbor Homewares | Complete on paper
✎ Work on paper. No notes. No phone. Set a 120-minute timer (VCAA allows 15 minutes reading time beforehand). Do not open model answers until every question is complete.
Harbor Homewares | Owner: Nina Torres | Trading / homewares and kitchenware | GST 10% | Perpetual FIFO, monthly reporting, supplier terms n/45
Selected transactions for June 2026
1. Tax Invoice #712 from Silverline Supplies (received 3 June): 40 units of cookware sets @ $55.00 excl. GST each. Delivery charge: $110 excl. GST. Terms: n/45. 2. Credit Note #42 from Silverline Supplies (received 8 June): 5 units of cookware returned due to incorrect order. Unit price $55.00 excl. GST each. 3. EFT Payment #389 (15 June): Harbor Homewares paid Silverline Supplies $11,220 (excl. $1,020 GST) in full settlement of a previous invoice within the discount period. The original invoice was for $13,200 incl. GST. 4. End of month – 30 June: Physical stocktake revealed 18 cookware sets on hand. Opening balance was 8 sets at $53 each. Accounts Receivable balance: $38,500. Accounts Payable balance: $22,800.
Question 1 (11 marks) — Journal Entries – Purchases, Returns, Payments
(a)3 marks
Prepare the General Journal entry to record Transaction 1 (Tax Invoice #712). A narration is required.
Tip: Purchase on credit: inventory cost = 40 × $55 = $2,200 + delivery $110 = $2,310 excl. GST. GST = $231. Dr Inventory $2,310, Dr GST Clearing $231, Cr AP $2,541.
(b)2 marks
Prepare the General Journal entry to record Transaction 2 (Credit Note #42). A narration is required.
Tip: Purchase return: 5 × $55 = $275 excl. GST. GST = $27.50. Dr AP $302.50, Cr Inventory $275, Cr GST Clearing $27.50.
(c)4 marks
Prepare the General Journal entry to record Transaction 3 (EFT Payment #389). A narration is required.
Tip: Payment with settlement discount. Original invoice $13,200 incl. GST = $1,200 GST, $12,000 excl. GST owed. Cash paid = $11,220. Discount received = $12,000 − $11,220 (excl. GST on discount). Work out discount: $12,000 × ? = … Actually cash $11,220 means $780 discount excl. GST on net. Check: $11,220 + $1,020 GST received back = total outflow. Discount Received = $780, GST on discount = $78.
(d)2 marks
With reference to the GST Clearing account, explain why the total GST amount in the entry for Transaction 3 differs from simply 10% of the cash paid.
Tip: The AP was originally set up GST-inclusive. When paid with a discount, the GST on the discount portion must be credited back to GST Clearing, not 10% of the cash paid.
